After spending 13 years working in investment banking, 10 years working in online media, and five years consulting in technology, I’d work at a bulge bracket investment bank if you want to get rich.
Here’s the bulge bracket salary progression with analysts starting at an $80,000-$90,000 base salary, plus $20,000-$60,000 cash bonus for their first full year.
Not bad right? If you can last for 10 years in investment banking, you’ll easily be able to break $500,000 a year. After 15 years, making over $1,000,000 a year is a distinct possibility, especially if you reach the title of Managing Director.
Technology startups pay like CRAP because they give you stock options and RSUs to make you feel like you’re getting a great package. But the reality is, 80% of startups end up shutting down after 5 years, 10% of startups end up becoming Zombie companies that just tread water and never pay out. Beware of joining startups!
Working at big technology companies like Netflix, Facebook, Alphabet (Google), and Salesforce, on the other hand, is pretty good due to the perks and higher median pay.
You can see in the chart below that Facebook pays their typical employee $240,000 plus restricted stock units. Google pays $192,000. Not bad, with perhaps better work hours to boot.
I’ve lived in SF since 2001 and know literally hundreds of people who joined startups thinking they’d get rich, only to end up still renting and financially way behind their peers because their multiple startups never went anywhere.
I’ve also consulted for three startups over several years: Sliced Investing, Personal Capital, and Motif Investing.
Sliced Investing, a Y-Combinator starutup was shut down after two years. Personal Capital is still chugging along after receiving Series E funding where I’m a shareholder. They have the best free financial tracking app and will likely be around for the long term.
Motif Investing shut down in April 2020 after selling off some of its business to Folio Institutional. They had a great product, but had a hard time making money.
Take the guaranteed path to comfortable wealth through investment banking. I went this route for 13 years, saved up enough to spit out about $78,000 in passive income when I was 34, negotiated a severance that year, and have been absolutely free since.
Investment banking is a sure thing if you survive due to the higher base pay. They raised base salaries by 60% or so after the financial crisis because investment banks were under scrutiny for paying huge bonuses. Pretty good side effect yeah?
Working at a startup is like taking a big gamble that is more than likely NOT going to pay off. There’s asymmetric risk and reward because you’re working your tail off for so little equity. You’re essentially trying to make the founders rich!
Check out this post: If You Join A Startup, Sleep With One Eye Open, for an interesting case study and more details.
About the Author: Sam worked in finance for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.
Sam started Financial Samurai in 2009 and has grown it to be one of the largest independently owned personal finance sites in the world. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.